Tuesday, January 15, 2008

Yes, It Is the Economy, Stupid

While the campaign season unravels into ugliness--everyone seeming to bring up Martin Luther King Jr. whenever it suits them--there is widespread ignorance about what the subprime meltdown, the devaluation of the dollar, the cost of the war in Iraq, and the rise in energy prices means for this country.

[Here's my take on the whole MLK issue--shut up. There is no one worthy of claiming his mantle or holding themselves up to that level. No one. He paved the way for people to have a calmer and more reasonable discussion about race. He paid the price, not the Clintons, not the Obamas, and certainly not the Romneys. He died so that people could have a discussion, not a slap fight.]

Back to the economy. Yawn. Snooze. Whatever. Yes, I know. But wait, here's why this matters--from MSNBC today:

Wholesale prices rose by 6.3 percent in 2007Year-over-year gain was largest in 26 years

WASHINGTON - Wholesale inflation last year shot up by the largest amount in 26 years while retailers suffered their worst December shopping season in five years as mounting economic woes caused consumers to put away their wallets.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

Meanwhile, retail sales fell by 0.4 percent in December, the worst showing in six months, the Commerce Department reported. Consumer confidence has plunged, reflecting the worsening housing slump and a lingering credit crisis.

For inflation, the year ended on a more positive note, with wholesale prices falling by 0.1 percent in December. That reflected decreasing costs last month for gasoline and other energy products. It was a significant slowdown after prices had soared by 3.2 percent in November, which had been the biggest one-month increase in 34 years.

The combination of rising inflation pressures and a weak economy represent a dilemma for the Federal Reserve over whether to cut rates to boost economic growth even at the risk of making inflation worse.

Federal Reserve Chairman Ben Bernanke last week sent a strong signal that the Fed is more worried at the moment about weak growth than inflation — given a series of weaker-than-expected data in recent weeks.

The economy skidded to a virtual standstill in the final three months of last year, raising fears the country could fall into a recession, unable to withstand the multiple blows from the prolonged downturn in housing, a severe credit crisis and soaring energy costs.

What we have is a weakened and ineffective Fed chairman who simply can't keep cutting interest rates to stave off problems. Rates are already bottoming out and further cuts are going to do what? Take us to zero? What then? What will the shock of having to raise those rates do to the economy?

Then we have multiple issues that derive from failed leadership--poor energy policy, poor monetary policy, a constant need to let everyone else bail us out, and no end in sight for the billions being spent in Iraq. Do we have a Department of Labor that is looking out for the American worker? Don't make me laugh!

Everything is going to get more expensive, faster and with more impact on lower income Americans than has previously been felt. That's why they are going back to the early 1980s and the 1970s to find precedents for these rises and developments. Are you hearing stories about people having to leave their jobs because gas is too expensive? Are you hearing stories about people getting to the end of that rope and finally having no where to go? Because it's getting harder and harder to make money with a vehicle, or at a job more than 20 miles away from where you live and there's no letup in sight. We're at the beginning of this, not the end.

More and more people are going to start losing their homes. As more and more debt increases in this country, more and more people are going to fall further and further behind. We are spending ourselves into oblivion, and the day of reckoning gets closer and closer without any kind of coherent strategy in place to deal with it.

Here's where energy policy and where people live intersect--those long commutes that I alluded to? They're caused by people living far from where they work and were enabled by a system where you once could live twenty or thirty miles from where you worked and where gas was cheap and roads weren't crowded. We have to roll back the development of these massive, sprawling communities that are too far from places where people work. Is there money to build more roads? Of course not--that money was pissed away years ago. Is there any sense to living this way? Well, you've got to explain why there isn't and you've got to be straight with Americans about it.

Are they talking about it on the campaign trail? Are they talking about sacrifice and changing the formula for delivering entitlements to Americans? Because it is all tied together. Find a sane way to end the war, you stop the flow of money into that rat hole. Find a way to redirect that effort into getting us off foreign oil, you jumpstart the alternative energy industries that are in their embryonic stage in this country. Get us into a shared sacrifice and alternative energy frame of mind, you change the habits of Americans. Change their habits by getting them to save their money and quit buying shit at Wal-Mart. And you can't do anything until you deal with entitlements. If you think you can "cut foreign aid" and "cut defense spending" and balance the budgets of the future, I'm sorry. It's not enough. The biggest piece of the pie chart is the entitlement part, and the part where we pay interest on the debt gets bigger all the time.

I know, I know. Wishful thinking. Well, it's thinking I wish was being articulated out there.

[And this is where you go to find pictures of fighting bears. Grrr! Tell your friends.]

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